4.5G Sets High Bar for 5G
The gigabit LTE announcements are coming thick and fast. In the US, both AT&T and T-Mobile have this week revealed plans to launch higher-speed, 4.5G technology in 2017, while rival Sprint promised in late December that it would also introduce gigabit-speed services this year. (See AT&T Gets in the Gigabit LTE Race.)
Going one better, Russia's Mobile TeleSystems OJSC (MTS) (NYSE: MBT) claimed to have switched on LTE-Advanced Pro -- as the standard is officially known -- in December. And with Nokia Corp. (NYSE: NOK) recently boasting of 110 4.5G deals, Europe's operators seem bound to join the fray over the next few weeks. (See Nokia Boasts 4.5G Momentum With 110 Deals.)
But the availability of gigabit-speed LTE services will add to the pressure on 5G developers to come up with a truly game-changing technology. It might even have implications for the 5G strategies on which operators embark.
The hubbub over the emerging technology is certainly understandable. Because 4.5G is an upgrade, rather than an entirely new technology, it can be deployed relatively economically, using existing 4G assets and spectrum resources. That is critical: Networks are struggling to cope with soaring volumes of mobile video traffic, while revenue growth is still proving elusive.
Included in the 3GPP's Release 13 last year, LTE-Advanced Pro makes use of techniques such as carrier aggregation and MIMO to boost capacity. With the former, spectrum channels in the same or different frequency bands can be combined to improve bandwidth. MIMO (for multiple input, multiple output) adds antenna capabilities for the same effect.
Besides appealing to operators, the technology should also be good news for equipment vendors in need of a post-2016 pick-me-up. Although it will not trigger a big wave of new spending in the same way as the first 4G standard, it may already have helped to dispel some gloom. Ericsson AB (Nasdaq: ERIC) expects industry sales in the mobile infrastructure market to shrink by just 2-6% this year, compared with a 10-15% decline in 2016. Nokia, meanwhile, is guiding for a 2.2% fall in its own network revenues in 2017, after watching them slide 10.5% over the first nine months of last year. (See Is Ekholm Ericsson's Savior or Seller? and Nokia's New Software Unit to 'Redesign' Company.)
Developing market operators, in particular, may be eager to use LTE-Advanced Pro as a fixed wireless access solution in communities poorly served by wireline broadband technologies. Telcos such as Sri Lanka's Dialog GSM have already had success using LTE to provide broadband connectivity to customer premises, says Gabriel Brown, a senior analyst with the Heavy Reading market research business. The 4.5G standard could fortify such offerings.
In more developed markets, meanwhile, 4.5G could hold particular interest for operators prioritizing their mobile TV strategies, including AT&T Inc. (NYSE: T) and UK-based EE (now a part of fixed-line incumbent BT Group plc (NYSE: BT; London: BTA)). Without gigabit-speed mobile connectivity, such players might struggle to support higher-quality video services.
Yet the business case for 5G is similarly predicated partly on demand for such higher-speed connectivity. Unless 5G delivers a substantial improvement over 4.5G in a commercial setting, operators may be in little rush to launch it. Even if it does, could the availability of gigabit-speed LTE, and mid-term lack of mobile applications requiring multi-gigabit-speed networks, take some wind out of 5G's sails, or at least convince operators to pursue a different 5G tack?
Next page: No 5G hurry